I-T Dept unable to make headway in Paradise Papers probe

The Income Tax Department has so far been unable to make much headway in the investigation against the Indian entities and individuals named in the ‘Paradise Papers’. While the investigation is still on and the government is trying to track the transactions, it has not been able to find any major violations, sources told Moneycontrol.

An investigation by the International Consortium of Investigative Journalists (ICIJ), in partnership with 96 news organisations, revealed that two firms — Appleby in Bermuda and Asiaciti Trust in Singapore — helped high-profile individuals and corporations avoid paying taxes by setting up offshore entities.

The 13 million-plus files that were leaked show that as many as 714 Indian companies and individuals are linked to offshore entities set up in tax havens.

“Most of the named (entities) in Paradise Papers have already declared offshore investment in their income tax return. Most of investors are sophisticated and they know the implications of not disclosing details in returns, especially after Panama Papers leaks,” said a source.

“So, it is difficult to detect violations in Paradise Papers. And most of them have been able to show that the income mentioned in the leaked papers has been invested overseas. Also, most of them used banking channels to send the money abroad,” the source said.

The NDA government has been tightening the screws on black money hoarders for the last couple of years. As part of those measures, tt also demonetised Rs 500 and Rs 1,000 notes in November 2016.

“The I-T department has written to respective countries also for getting information about these entities’ investments. The department and government will not give a clean chit to anybody until they check all sources of information,” another source in the I-T department told Moneycontrol.

With regards to Paradise Papers, the entities named in the expose could have misused the Liberalised Remittance Scheme, a source pointed out.

“The case of misusing of Liberalised Remittance Scheme would be investigated by Enforcement Directorate,” a senior official of Enforcement Directorate told Moneycontrol.

“In Panama Papers, the entities that transacted bought/sold companies but did not set up new onew. The rules and regulations are set up for establishing a company and not buying,” the official said.

Ashok Gehlot, Sachin Pilot, Vayalar Ravi, YS Jagan Mohan Reddy, Union Minister of State for Civil Aviation Jayant Sinha, Veerappa Moily, BJP MP RK Sinha, Amitabh Bachchan and Manyata Dutt were all named in the leak in November 2017.

Companies named in the list include United Spirits, Jindal Steel, Apollo Tyres, Havells, the Hindujas, Emaar MGF, Videocon, Hiranandani Group and DS Construction.